Phoenix Tax Consultation & Preparation for New Business

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Starting a New Business?

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Choosing the correct entity for your new business (e.g. “S” corporation, sole proprietor, limited liability company (LLC), or Partnership) is a crucial decision that can have tax implications – positive and negative that you need to consider. The wrong structure could cost you thousands. At Singer Tax & Accounting, PC we take the time to help you understand all of the complexities of running your own business.

Assistance in evaluating which entity is right for you including pros and cons of each type

You will know the tax implications of each type of business

We offer a broad spectrum of advice and information above and beyond tax issues, that will help you get your new business off on the right road

Client Testimonials

I did not know how complex this could be. Harvey, you made us feel more at ease after going over all of the options. Thanks for all the help and guidance.

Ben & Janet

Sun City

Wow, I did not believe that there were as many hats to wear as you explained to me. You were right on. I could not have gotten my business off to a better start without your support.

Cosimo

Phoenix, AZ

Important New Company Information for Arizona Business Owners

Call (602) 482-8006 for New Business Tax Planning Help from a CPA Now!

Introduction

The American dream is alive and well. If you are like many other Americans, the independence and entrepreneurship of owning your own business has a strong appeal. Starting and running your own business is part of the American Dream, and there are some 27 million firms in the country, and as the economy continues to recover, more and more are starting up. While the majority of these entrepreneurs are likely to have great knowledge of their respective fields, it’s less likely that they are well-versed about taxes. The Internal Revenue Service website has some excellent information for business owners regarding tax payments, and we briefly summarize it below.

Starting & Operating a Business

Starting and running your own business is part of the American Dream, and there are some 27 million firms in the country, around 75 percent of which have no payroll. While the majority of these entrepreneurs are likely to have great knowledge of their respective fields, it’s less likely that they are well-versed about taxes. The Internal Revenue Service website has some excellent information for business owners regarding tax payments, and we briefly summarize it below.

Where Do I Begin When Starting a New Business?
For starters, you will need to determine is this going to be a hobby or a business? It is also important to decide on your business structure. Your income tax return filing procedures will depend on the structure you choose. For more information on this, click the Learn More button below.

What Taxes Should I Expect as a Business Owner?
It’s a mistake to think your tax affairs will be smooth sailing once you become an established business. No matter how long you have been operating your business, there is always a chance you will encounter some unusual situations. For example, do you know the correct procedure when it comes to changing your business?

What If I Decide To Close My Business?
Believe it or not, when the time comes to close your business, there is a lot of work to do. You can’t just shut your doors and hope the IRS goes away, because it won’t! There are different reasons for closing a business and a variety of methods to complete the process. For example, you may file for bankruptcy, create a new business structure, or sell the business.

Guide to Information Return Reporting

An information return is a tax document that must be completed if you are engaged in a business or trade, whether it is classified as a corporation, estate, individual, trust, or partnership, if you make a reportable transaction during a calendar year. This document must be sent to the IRS.

Please note that an information return is not the same thing as an income tax return, as it is only used for the purposes of reporting. The information it contains is used to help you prepare your return and also assists the IRS when it comes to matching information from specific transactions to your tax return.

What is an Information Return?
An information return is a tax document that must be completed if you are engaged in a business or trade, whether it is classified as a corporation, estate, individual, trust, or partnership, if you make a reportable transaction during a calendar year. This document must be sent to the IRS.

What Transactions Do I Have to Report?
You will need to go to the IRS website, as it contains a list of 120 transactions that must be reported, along with the forms that must be used. However, this is not an exhaustive list, so even if a certain transaction is not included, it doesn’t mean you can avoid reporting it.

When Do I File?
You normally need to file any of the 1099 forms with the IRS by Feb. 28, but recipients should receive copies by Jan. 31. The reporting requirements can be rather complicated and involve obtaining a W-9 (Request for Tax ID Number) and a tax identification number from the payee.

Which Information Returns Do I File?
There are different information returns for a variety of transactions. The process can be confusing; for example, there are 12 1099 forms that are all used for different purposes. It is a good idea to look for advice from a respected accountant in Arizona if you don’t understand the process.

Are There Penalties When Filing a Late Information Return?
Information return reporting requirements have been in place for many years, but the IRS has recently become stricter when it comes to enforcement. Penalties for late filing have been significantly increased.

Can I get an Extention On an Information Return?
If you believe you will be late when it comes to filing your information return, ask for a 30-day extension by submitting Form 8809. You can also make the request in writing to the IRS office in Kearneysville, West Virginia.

What if I Make a Mistake On My Information Return?
If you make a mistake on your information return, you need to file for a correction as soon as possible. You will need to read more on amending mistakes at the IRS website. Alternatively, you can get in touch with an accountant today and ask for advice.

Quick Guide to Employment Taxes

This guide relates to the payroll taxes paid by employers. If you are self-employed, you need to check out the IRS Self-Employed Individuals Tax Center to discover your tax obligations.

What Are The Different Taxes Withheld?
Employers withhold taxes from their employees’ paychecks and hand this money over to the various tax agencies. These deductions include Federal Income tax, Social Security tax, Medicare tax, Additional Medicare tax, State income tax, and FUTA.

What Are Voluntary Deductions?
These deductions are only made if the employee agrees to them. This money pays for different benefits that the employee has elected to participate in. Two examples include health and life insurance premiums.

Are there Other Responsibilities of Employers?
The responsibilities of employers don’t end when the paycheck has been issued; they are also responsible for the company’s payroll taxes, depositing the money withheld from the employee;s paychecks, preparing reconciliation reports, and more.

What is FICA?
The Federal Insurance Contributions Act (FICA) tax is comprised of Social Security and Medicare taxes, totaling 15.3 percent. Both employer and employee pay the 6.2 percent Social Security and 1.45 percent Medicare taxes.

What Are the Due Dates?
Employers must report wages, tips, and other forms of compensation paid to employees throughout the year. This is done by filing the correct forms. There are several major dates on the calendar when it comes to employers filing taxes. To view the various due dates click the Learn More button.

Paying Employment Taxes

The simplest advice anyone can give to employers when it comes to paying employment taxes is this: Don’t mess with the IRS! If you withhold money from employees in the form of taxes, you better give it to the IRS or else they will come after you hard and fast because it is government money and is effectively an IRS trust fund.

If your business is struggling, the idea of holding on to this cash and paying the IRS later may seem tempting, but the taxman doesn’t like to be kept waiting for his due. Here are some other good reasons to be careful:

You’re Personally Liable for Payroll Taxes
All responsible persons (usually the owner of the business) have personal liability for payroll taxes, and excuses are rarely accepted. For example, you can’t claim you have been duped by your bookkeeper, because they don’t have personal liability.

Severe Penalties for Non-Payment of Taxes
The IRS can hit you with a 100 percent penalty, known as a Trust Fund Recovery Assessment, if you are a responsible person. While courts will focus on whether you have knowledge of non-payment of taxes, you don’t need to have performed the tax withholdings to be deemed responsible. Employers who have signature authority and fail to exercise it may be deemed liable.

Offenders Often Face Jail Time
Figures from 2010 show that 83 percent of personal tax liability convictions forced the offender to serve jail time, and the average sentence was two years. It is also important to note that these figures were all-time highs, which suggests the IRS is becoming even more focused on preventing tax fraud.